NCM is a gold producer with its main operations in Australia, Indonesia, Papua New Guinea and Fiji.
Newcrest has interests in six production provinces in four countries and a portfolio of brown and green field exploration projects.
With recent purchase of Lihir and Cadia Valley mines the company has move into expansion by acquisition as opposed to exploration. The price paid was considered on the high side.
These purchases have put a strain on the company’s capital. Couple this with the downgrade in longer-term gold production means the NCM share price has fallen quite considerably.
The gold price has also come of its high, which makes the decision to invest in this company more complex.
If the price falls further Newcrest will start to struggle.
It is not a dividend stock as it has stopped dividends for the time being and even before this the dividend was not worth mentioning.
This is a play on the gold price and the ability for Newcrest to get back on track with production and exploration.
It has a massive gold reserve and if managed right should produce the results.
The price recently bottomed at $7.20 and recent good news on production has had a good move back up.
NCM is currently trading at $9.23 and has a fair value of $22.00 making it a buy at these levels.
However, NCM is only for investors who have an appetite for risk.
For more information on Newcrest Mining Limited (NCM) please contact us on 07 4771 4577.